U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19001 / December 16, 2004

SEC v. Maurice L. Arel, (United States District Court for the District of New Hampshire, Civil Action No. 04-475, Filed December 16, 2004)

SEC CHARGES FORMER CEO OF NEW HAMPSHIRE WATER COMPANY WITH SECURITIES FRAUD

The Commission today filed a settled civil fraud action against Maurice L. Arel of Nashua, New Hampshire, concerning false and misleading disclosures by Pennichuck Corporation during Arel's tenure as chief executive officer and a director of the company. The action, filed in federal district court in New Hampshire, charges Arel with violating or aiding and abetting violations of the antifraud, proxy statement, and reporting provisions of the federal securities laws in connection with Pennichuck's materially false and misleading statements and omissions concerning the company's real estate operations in its periodic filings with the Commission. In a related action instituted today, the Commission issued a settled cease-and-desist order against Pennichuck. Without admitting or denying the Commission's allegations, Arel consented to the entry of a final judgment permanently enjoining him from future violations of the federal securities laws. Arel also agreed to a permanent bar from serving as an officer or director of a public company.

The Commission's complaint alleges that Arel caused Pennichuck's false statement in a Commission filing that an executive officer of the company purchased a home from one of Pennichuck's real estate joint ventures on the same terms that were available to any independent third party. In fact, Arel, the Pennichuck officer referred to in the filing, obtained favorable terms on his purchase of a home from one of Pennichuck's joint ventures that were worth approximately $70,000 and were not available to other purchasers. Arel also aided and abetted Pennichuck's failure to disclose in its Commission filings that Pennichuck's real estate joint ventures repeatedly hired a company controlled by Arel's son to perform landscaping work, and paid a total of approximately $800,000 to that company during the period 1998 to 2002.

The complaint further alleges that, from 1998 through 2002, Arel aided and abetted Pennichuck's failure to disclose all material information concerning its relationship with its main real estate joint venture partner. According to the complaint, a single real estate developer was Pennichuck's partner on six separate real estate joint ventures, and the same developer obtained multiple contracts and loans from Pennichuck. Pennichuck's Commission filings during this period failed to disclose that these joint ventures and other transactions were all with the same developer, and that this developer was the joint venture partner that provided Arel with favorable terms on his home purchase, and repeatedly hired Arel's son for landscaping work.

In its complaint, the Commission charged Arel with violating Sections 10(b), 13(b)(5), and 14(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13b2-2, and 14a-9 thereunder, and aiding and abetting Pennichuck's violations of Sections 13(a) of the Exchange Act, and Rules 13a-1, 13a-13, and 12b-20 thereunder. Arel has consented to entry of a final judgment permanently enjoining him from future violations of the above laws. Arel has also agreed to be permanently barred from serving as an officer or director of a publicly-traded company.

In related proceedings based on the same conduct, the Commission today issued a settled cease-and-desist order against Pennichuck that prohibits Pennichuck from violating Sections 10(b), 13(a), and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, and 14a-9 thereunder. [See In the Matter of Pennichuck Corporation, Release No. 34-50869, File No. 3-11773].

The Commission's investigation and this enforcement action have been coordinated with the State of New Hampshire Bureau of Securities Regulation, which also announced today a settled administrative action against Arel and Pennichuck.